Charging for services is implementation of a contract between a service provider and a customer. In principal, there are two types of charging: distributed and centralized.
In distributed charging the customer pays the vendor each time he/she uses the services provided by the vendor. The payment is made either in cash or by using some other equivalent method. For example, delivery of mail is paid by using stamps. A more recent example of a payment method used in distributed charging is electronic cash. Each "coin" of electronic cash consists of a encrypted binary sequence, which must be verified by the server of a bank.
In centralized charging, either the vendor or a third party monitors the usage of services. The customer is charged periodically, for example, once a month. The bill is based on data gathered during the previous charging period. Three well-known examples of centralized charging are electricity, telephone and credit card charges. Centralized charging consists of three stages. The first stage is the drawing up of a contract between the user and the service provider, on the services and the charging for the services. The second stage is the monitoring (or metering) and storage of usage data. The third stage is the generation and distribution of a bill to the customer. The bill is generated in the billing system on the basis of stored information.
For example, the centralized billing system used in a telephone network is based on a contract between subscribers and the telephone company. The essence of the contract is that the subscriber is given access to telephone services, i.e. he/she can make and receive calls. In return he/she pays the telephone company on the basis of predefined tariffs. Typically, the bills contain charges of two different types: fixed charges and charges for usage. The fixed charges are charged regardless of whether the services are used or not. Charges for usage depend on how many calls a subscriber has made and possibly also on how many calls he/she has received. In order to be able to charge for usage telephone company has to monitor the made and received calls. The monitoring is connection based; it is done by switches in the network.
FIG. 1 illustrates a well-known centralized charging method used in telephone networks by presenting a part of a public telephone network. For each call made, the network switch SW (subscriber's local switch) creates one or several charging records CDR (Charging Data Record). These records are first stored in memory and then sent to a centralized billing system in which they are stored in a mass memory, for example, in a magnetic tape or a hard disk. There may be an additional processing stage between the switch and the billing system. In this stage the charging records are preprocessed, i.e. prepared, for the billing system. The preprocessing may include, for example, a conversion of a tariff class field into another format. The mass memory of a billing system may contain millions of records. These records form the "raw data", which the billing system processes. So the processing of the charging records takes place as a separate batch process at a later date than the date of generating the records. It should be noted that in practice the charging may be much more complicated than the example presented here. For example, in a cellular network each participating cellular network switch may generate charging records. However, the principle of charging is similar to the one presented above.
From now on, the charging records are referred to as "CDR" and the program forming the charging records as the "CDR generator".
The centralized charging of telephone services is based on off-line charging and on the fact that in the network there are CDR generators that record the setup and release events. However, this kind of charging is not technically suitable when multimedia services are offered in the network. There are two basic reasons for this. First, most of the current multimedia services use IP (Internet Protocol), which is used for providing connectionless services. Charging based on telephone network connections is not suitable for this kind of system. Second, it is obvious that the charging for multimedia services must be based on the content of the transferred information. The current telephone network can monitor setup and release events, but it cannot monitor the content of what is being transferred. When using CDR generators, the network operator must choose between two alternatives: either (a) the charging will be based on connections regardless of content or (b) in connection with each delivery, information about the content of the transferred information is retrieved from the service provider. The first alternative means that the operator cannot offer charging for content; the existing centralized billing systems of telephone networks cannot be utilized efficiently. For the customer this means that he/she gets one bill from the operator and, in addition to that, separate bills from each service provider. The second alternative leads to a highly integrated, technically complicated system in which there is much traffic between servers and CDR generators.